Welfare-to-work scheme 'is failing'

A multi-billion-pound scheme to help long-term unemployed people into work has been branded extremely poor by MPs.

The government's Work Programme only managed to get 3.6% of the people on the scheme off benefits and into secure employment in its first 14 months, the Public Accounts Committee said.

The government said it was "early days" for the scheme and the committee's report had painted a "skewed picture".

But Labour said the programme was "worse than doing nothing".

The 3.6% of claimants on the scheme who had moved off benefits into sustained employment between June 2011 and July 2012 was a mark well below the target of 11.9% that the Department for Work and Pensions (DWP) expected to achieve, the MPs said.

The committee's report pointed out that it was also below the official estimate of how many of those claimants would have found work anyway if the programme had never been launched.

'Extremely poor'

Labour MP Margaret Hodge, who chairs the committee, said the programme was "absolutely crucial" for helping the most vulnerable get into and stay in work but its performance so far had been "extremely poor".

This report underscores the Work Programme's comprehensive failure to bring down long-term unemploymentLiam Byrne, Shadow work and pensions secretary

"It is shocking that, of the 9,500 former incapacity benefit claimants referred to providers, only 20 people have been placed in a job that has lasted three months, while the poorest-performing provider did not manage to place a single person in the under-25 category into a job lasting six months," she said.

The programme was set up in June 2011 to help the long-term unemployed moved off benefits and into sustained employment. It is expected to cost between £3bn and £5bn over five years.

Work Programme providers - largely private companies - are paid on performance. They receive a small fee initially, but most of their fee is dependent on workers staying in their jobs for three or six months.

Not one of the 18 providers has met its contractual targets and their performance ''varies wildly'', the committee said.

"The best-performing provider only moved 5% of people off benefit and into work, while the worst managed just 2%," said Mrs Hodge.

The committee called for the DWP to take action against the providers that are failing.

'Creaming and parking'

MPs warned that, given the poor performance, there was a high risk that one or more providers would fail and go out of business or have their contracts cancelled.

The committee shared concerns that providers were concentrating on people more likely to generate a fee, and sidelining jobless clients who required more time and investment - a process known as ''creaming and parking''.

Performance is beginning to build in the pipeline.Philip Curry, Employment Related Services Association

The MPs made a series of recommendations, including urging the DWP to identify why the work programme's financial incentives were not succeeding.

A spokesman for the DWP said: "This report paints a skewed picture. More than 200,000 people have moved off benefits and into a job thanks to the Work Programme.

"It is making a real difference to tens of thousands of the hardest-to-help jobseekers. Long-term unemployment fell by 15,000 in the latest quarter.

"The Work Programme gives support to claimants for two years and it hasn't even been running that long yet, so it's still early days. We know the performance of our providers is improving."

'Comprehensive failure'

Philip Curry of the Employment Related Services Association, which represents organisations taking part in the welfare-to-work scheme, told the BBC News channel: "The Work Programme is working."

He warned that the MPs' report was based on statistics that represented a "limited snapshot" of progress so far.

"The Work Programme has found 207,000 people employment up until the end of September 2012. That isn't shown in the DWP statistics published in November because to register in those statistics you need to be in employment for at least six months," he said.

"Performance is beginning to build in the pipeline."

Katja Hall, chief policy director at the Confederation of British Industry, said that although the Work Programme's initial results were "disappointing", gains would come in the longer term.

But TUC general secretary Frances O'Grady said the programme had "spectacularly underachieved", while Len McCluskey, Unite general secretary, said the programme should be abandoned.